Correlation Between Zscaler and Confluent

Can any of the company-specific risk be diversified away by investing in both Zscaler and Confluent at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zscaler and Confluent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zscaler and Confluent, you can compare the effects of market volatilities on Zscaler and Confluent and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zscaler with a short position of Confluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zscaler and Confluent.

Diversification Opportunities for Zscaler and Confluent

0.33

Correlation Coefficient

Zscaler  Confluent

Weak diversification

The 3 months correlation between Zscaler and Confluent is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Zscaler and Confluent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Confluent and Zscaler is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zscaler are associated (or correlated) with Confluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Confluent has no effect on the direction of Zscaler i.e., Zscaler and Confluent go up and down completely randomly.

Pair Corralation between Zscaler and Confluent

Allowing for the 90-day total investment horizon Zscaler is expected to generate 0.61 times more return on investment than Confluent. However, Zscaler is 1.64 times less risky than Confluent. It trades about 0.04 of its potential returns per unit of risk. Confluent is currently generating about -0.07 per unit of risk. If you would invest  19,293  in Zscaler on January 22, 2025 and sell it today you would earn a total of  816.00  from holding Zscaler or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zscaler  vs.  Confluent

Zscaler

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zscaler may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Confluent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Confluent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Zscaler and Confluent

The main advantage of trading using opposite Zscaler and Confluent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zscaler position performs unexpectedly, Confluent can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Confluent will offset losses from the drop in Confluent's long position.

The idea behind Zscaler and Confluent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.